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New Zealand Announces Deal To Keep 'Hobbit' Movies

The film version of JRR Tolkien's "The Hobbit" will be made in New Zealand, after all.

Prime Minister John Key announced the deal today after two days of talks with Warner Bros executives.

"I'm pleased to announce that an agreement has been reached between the New Zealand government and Warner Brothers that will enable the two 'Hobbit' movies to be directed by Sir Peter Jackson to be made in New Zealand," Key said.

Warner Bros had threatened to make the movies -- worth $500 million -- elsewhere after a boycott by local actors over pay and working conditions.

The deal gives the studio tax breaks worth tens of millions of dollars and guarantees that filming would not be held up by strikes or other union actions.

New Zealand got a huge boost in tourism revenues after Jackson's Oscar-winning trilogy -- based on Tolkien's "The Lord of the Rings" -- was shot there.

compiled from agency reports